# The Future of B2B Payments: Buy Now, Pay Later
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-10-17
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: The Future of B2B Payments: Buy Now, Pay Later
Meta Description: Discover the potential of B2B BNPL, a growing trend in business transactions. Learn how digital solutions are reshaping trade credit for B2B commerce.
URL: https://financedigest.com/the-future-of-b2b-payments-buy-now-pay-laterhtml

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# The Future of B2B Payments: Buy Now, Pay Later

_By_ **_Louis Carbonnier_** _, the Co-Founder and Co-CEO of_ [_Hokodo_](http://www.hokodo.co)

Buy Now, Pay Later, (BNPL), is a hugely popular payment method  among consumers and has become an established and expected part of the online retail experience. The expansion of BNPL has been driven in recent years by the emergence of fintechs providing accessible [digital payment](https://www.financedigest.com/can-i-please-speak-to-someone-why-building-relationships-is-still-crucial-in-digital-payments.html "“Can I please speak to someone?” Why building relationships is still crucial in digital payments") systems.

Precedence Research estimates the Buy Now, Pay Later industry will be worth more than $3 trillion by 2030, despite the [challenges Klarna and its B2C BNPL peers have faced](https://www.financedigest.com/under-saved-and-underprepared-women-face-challenges-saving-for-retirement.html "UNDER-SAVED AND UNDERPREPARED: WOMEN FACE CHALLENGES SAVING FOR RETIREMENT"). It’s clear BNPL for consumers is here to stay, even if some level of consolidation is to be expected in the [coming years](https://www.financedigest.com/the-non-invasive-prenatal-testing-nipt-market-is-estimated-to-witness-stupendous-growth-in-the-years-to-come.html "The Non Invasive Prenatal Testing Nipt Market is estimated to witness stupendous growth in the years to come"). But how can this successful model be applied to business-to-business (B2B) trade?

Throughout the history of [business commerce](https://www.financedigest.com/smishing-is-a-new-virus-plaguing-big-business-conversational-commerce-to-the-rescue.html "‘Smishing’ is a new ‘virus’ plaguing big business – Conversational Commerce to the rescue!"), companies have made their commercial transactions using trade credit. Today, annual sales on B2B [trade credit](https://www.financedigest.com/managing-trade-credit-and-insurance-in-the-context-of-international-commerce-expansion.html "Managing trade credit and insurance in the context of international commerce expansion ") amount to an impressive $30 trillion. B2B BNPL is simply another name for trade credit, yet despite how well-suited it is to [B2B transactions](https://www.hokodo.co/buy-now-pay-later-future-b2b-payments-white-paper), the concept hasn’t been widely embraced.

**Why has B2B fallen behind in the BNPL revolution?**

BNPL has been slow to take off in the B2B space for multiple reasons. Firstly, it could be a question of reputation, as some BNPL providers in the B2C space, such as Klarna, have come under significant scrutiny. Buy Now, Pay Later providers have been criticised for encouraging consumers to [spend more money](https://www.financedigest.com/student-finances-exposed-how-do-they-really-spend-their-money.html "Student finances exposed: How do they really spend their money?") than they can afford, under terms they will find challenging to meet. These reputational issues may have hindered the growth of BNPL in the B2B sector.

B2B BNPL is also a much more complex undertaking. As B2B purchases are usually larger and costlier, the [credit risk](https://www.financedigest.com/aon-assists-freddie-mac-to-reach-5bn-risk-transfer-milestone-for-u-s-mortgage-credit-business.html "AON ASSISTS FREDDIE MAC TO REACH BN RISK TRANSFER MILESTONE FOR U.S. MORTGAGE CREDIT BUSINESS") is higher and the chance of fraud increases. This makes online lending more difficult to implement for B2B.

Some sellers have turned to issuing digital credit from their own accounts – a practice [leaving them open](https://www.financedigest.com/more-than-half-of-workers-are-open-to-leaving-their-current-employers.html "MORE THAN HALF OF WORKERS ARE OPEN TO LEAVING THEIR CURRENT EMPLOYERS") to significant risk. While traditional financial partners haven’t developed a [digital trade credit solution](https://www.financedigest.com/42-of-retailers-say-payment-over-time-solutions-are-very-important-to-ensuring-future-digital-innovation.html "42% of retailers say payment-over-time solutions are ‘very important’ to ensuring future digital innovation"), fintech companies have stepped in to plug the gap.

**How is B2B BNPL different?**

While [B2B BNPL and B2C BNPL both result in the ability to defer payment](https://www.financedigest.com/how-can-you-reduce-the-risk-of-fraud-in-b2b-payments.html "How can you reduce the risk of fraud in B2B payments?") for the buyer, the solutions differ in two main ways.

[Business customers are less likely to be persuaded to overspend than consumers](https://www.financedigest.com/citigroup-says-will-close-russian-consumer-commercial-business.html "Citigroup says will close Russian consumer, commercial business"). To that end, it is much less likely that business customers will be exploited or overextend themselves.

The second difference is that B2B transactions are often more complicated. The purchasing [process is longer and requires multiple discussions with stakeholders and decision-makers](https://www.financedigest.com/board-report-highlights-complex-decision-making-process-across-banking-and-finance-sector.html "Board Report Highlights Complex Decision-Making Process Across Banking and Finance sector"). Credit checks are also more convoluted. Credit analysts are needed to assess risk while Credit Underwriters make informed decisions, highlighting the need for the streamlined [process an external payments](https://www.financedigest.com/are-your-payment-processes-in-cheque-for-the-new-legislation.html "ARE YOUR PAYMENT PROCESSES IN CHEQUE FOR THE NEW LEGISLATION?") solution provides.

**The evolution of the** [B2B BNPL market](https://www.financedigest.com/b2b-telecommunication-market-to-more-than-us-27-billion.html "B2B Telecommunication Market to more than US$ 27 billion")

Credit terms for B2B payments are necessary for the [current climate](https://www.financedigest.com/what-flatsharing-is-a-financial-gamechanger-in-the-current-climate.html "Why flatsharing is a financial gamechanger in the current climate"). When the economy is weak, and growth could slow, they offer a new [way for businesses](https://www.financedigest.com/6-ways-to-spring-clean-your-business-finances.html "6 ways to Spring clean your business finances") to avoid stagnation.

However, right now, there are very few [credit options](https://www.financedigest.com/do-you-have-bad-credit-consider-taking-out-these-loan-options.html "Do You Have Bad Credit? Consider Taking Out These Loan Options") for online B2B sales. Recent research has highlighted that just 75% of [B2B marketplaces](https://www.financedigest.com/why-embedded-finance-will-be-integral-in-the-future-of-b2b-marketplaces.html "Why embedded finance will be integral in the future of B2B Marketplaces") allow payment through their platforms, and only 21% offer the option to pay using BNPL. Of these, 38% use an internal solution, which leads to large risk for [small businesses](https://www.financedigest.com/how-banks-will-evolve-to-support-small-business-owners.html "How banks will evolve to support small business owners"). The upshot of this is a checkout process that hasn’t been optimised, doesn’t [support credit terms and has a lack of scalability for providers](https://www.financedigest.com/keysource-to-provide-critical-facilitiesmanagement-support-for-leeds-city-council.html "KEYSOURCE TO PROVIDE CRITICAL FACILITIESMANAGEMENT SUPPORT FOR LEEDS CITY COUNCIL").

In the past couple of years, a small group of challengers disrupting the [way B2B credit](https://www.financedigest.com/4-ways-to-get-a-bad-credit-loan.html "4 Ways to Get a Bad Credit Loan") payments are being made have entered the market. Third-party suppliers like Hokodo are providing [embedded financing](https://www.financedigest.com/online-marketplaces-embracing-embedded-finance-to-benefit-both-customers-and-vendors.html "Online marketplaces: embracing embedded finance to benefit both customers and vendors     ") solutions for buyers and sellers. Buyers benefit from seamless payment terms to suit their needs and sellers are free from the concern of bad debt and the complexity of managing deferred [digital](https://www.financedigest.com/italys-nexi-signs-digital-payments-deal-with-tims-olivetti.html "Italy’s Nexi signs digital payments deal with TIM’s Olivetti") payments.

Hokodo reported that in 2022, 41% of SMB owners actively sought suppliers offering credit terms, while a quarter of [firms indicated that access to credit](https://www.financedigest.com/some-credit-suisse-at1-bondholders-seek-legal-advice-law-firms.html "Some Credit Suisse AT1 bondholders seek legal advice -law firms") would be crucial to their survival in the next twelve months. With the rising [cost of living crisis](https://www.financedigest.com/estonias-pro-kyiv-government-faces-election-test-amid-cost-of-living-crisis.html "Estonia’s pro-Kyiv government faces election test amid cost of living crisis"), fuel prices increasing swiftly, and uncertainty coming from many sources, SME owners will find B2B BNPL providers vital to growth, allowing them to invest in and develop their business.

Dig further into these findings and themes in Hokodo’s new B2B payments [white paper](https://www.hokodo.co/buy-now-pay-later-future-b2b-payments-white-paper?utm_source=pr&utm_medium=pr&utm_campaign=white_paper_2022).

**_Author Bio:_**

_Louis Carbonnier is the Co-Founder and Co-CEO of_ [_Hokodo_](http://www.hokodo.co) _where he leads the commercial and product functions. Hokodo is a fintech company that enables B2B merchants and marketplaces to [offer a buy](https://www.financedigest.com/mfe-offers-to-buy-1-05-stake-in-mediaset-espana-from-vivendi-ahead-of-delisting.html "MFE offers to buy 1.05% stake in Mediaset Espana from Vivendi ahead of delisting") now, pay later solution to their customers._


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